Mar 28, 2025 5 min read

How to adapt your business to the new tariff reality in 3 steps

Every meeting I have these days follows the same pattern: Canadian business owners are frustrated because their banks are suddenly treating them like high-risk customers. As a lender myself, I’m asking for extra reports, questioning your sales forecasts, and picking apart your US business relationships like never before.

Here's why: Those 25% US tariffs on Canadian goods (and counter tariffs) have banks seriously worried. While they’re not seeing borrowers fall behind on loans (yet), they’re drilling into borrowers who depend on cross-border trade. With regulators and shareholders breathing down their necks, banks are tightening their lending rules just when you need flexibility the most.

In this issue, you will learn:

Why your bank is suddenly treating your cross-border business like it's risky
3 practical ways to keep your business healthy despite tariffs
What to show your banker to convince them to keep lending to you

When Cross-Border Business Gets Complicated

Let me share something that happened to me this week that shows exactly what's going on.

I wanted to buy a new Komodo grill and thought I'd support a local Canadian retailer. What they told me was crazy: They didn’t have the grill I wanted in stock anywhere in North America. To get one for me, they'd have to pay a 40% tariff to bring it from China to the US, then another 25% tariff to get it across the US-Canada border. That's a massive 75% price jump on the same grill (from $1,700 to $2,973). Needless to say, I'm looking for a shop with existing inventory to avoid that sticker shock.

The store explained that this is happening with everything new that they sell. They're forced to either raise prices dramatically or make much less money on each sale.

But this isn't just happening to them.

Retailers, distributors, and manufacturers caught in complex international supply chains are all facing similar financing challenges. Banks are getting stricter with their loan requirements, especially for businesses in industries that depend heavily on cross-border trade, like metal manufacturing, auto parts, and consumer goods.

Smart Ways to Weather the Tariff Storm

Instead of fighting against the new tariff reality, successful businesses are changing their approach to stay profitable. Here are the strategies I'm seeing work best:

1. Use Accounts Receivable Insurance to Find New Customers

One of the biggest challenges in expanding beyond US customers has always been not knowing if new international buyers will pay you on time. AR insurance solves this problem in a practical way.

How it works:

The insurance covers 85-90% of what your customers owe you if they don't pay
Insurance companies tell you exactly how much credit is safe to offer new customers
You can confidently offer payment terms to new customers in countries besides the US
Banks are more willing to lend against insured receivables
It typically costs between 0.2% and 1.5% of your insured sales

Best for: Canadian exporting businesses looking to quickly find new customers outside the US without taking on too much risk.

Here's a real example I heard from an insurance rep recently: A Canadian company was getting ready for an international trade show, hoping to find new customers beyond the US market. Before the show, they talked with their AR insurance rep and shared the names of five companies they wanted to do business with but weren't sure about extending credit to.

The insurance rep took these company names and, using their global payment database, came back the same day with pre-approved credit limits: $400,000 for one prospect, $700,000 for another, and $800,000 for a third, and etc. At the trade show, the company approached these prospects with confidence, telling them they didn't even need to fill out a credit application because they were already approved for specific amounts.

The result?

In just one weekend, they booked ~$3 million in new sales from these international customers.

The owner was super impressed by the fact that having insurance can be a sales tactic to expand and diversify globally. This ultimately allowed them to increase their borrowing limit, helping them buy the inventory needed for these new orders.

2. Find New Suppliers Outside the Tariff Zone

The tariff situation means you need to rethink your entire supply chain, not just your customer base.

How it works:

Map out your complete supply chain to find where tariffs are hurting you most
Build direct relationships with suppliers in countries not affected by these tariffs
Set up backup suppliers for your most important materials
Negotiate flexible contracts that let you quickly switch suppliers if needed
Consider bringing production of heavily tariffed components in-house

Best for: Manufacturers and distributors whose supply chains currently run through the US.

3. Shift to "Made in Canada" Production

For some businesses, the tariff math now makes domestic production cheaper than importing. This means moving production in-house, rather than importing finished goods.

How it works:

Figure out which of your products get hit hardest by tariffs when imported
Run the numbers on moving assembly or manufacturing to Canada
Look into government incentives for expanding production in Canada
Arrange financing specifically for equipment and facility expansion
Show your bank how producing in Canada reduces your tariff risk

Best for: Companies currently importing finished goods that could realistically be made in Canada.

How to Talk to Your Bank When Tariffs Hit Your Business

Now that you have strategies to adapt to the tariff situation, you need to convince your bank you're still a good company to lend money to. These steps have helped my clients keep their financing despite tariff challenges:

1. Develop a comprehensive tariff impact analysis showing exactly how the 25% tariffs affect your business model, including:

Direct cost impacts on imported materials
Price elasticity of your products in US markets
Competitive position relative to US-based alternatives
Currency impact scenarios (weakening CAD effects)

2. Create a detailed tariff mitigation plan demonstrating your proactive approach:

Supply chain restructuring initiatives already underway
Pricing strategy adjustments with major customers
Cost reduction plans to offset margin compression
Timeline for implementation with measurable milestones

3. Prepare multi-scenario financial projections that show:

Base case reflecting current tariff environment
Downside case showing additional trade escalation
Recovery case showing adaptation and stabilization
Clear debt service coverage under each scenario

4. Document market diversification efforts highlighting:

Current customer mix by country/region
Active sales pipeline in non-US markets
Strategic partnerships reducing US market dependence
Historical success in other international markets

5. Highlight your treasury management strategy for:

Currency risk mitigation tactics
Cash conservation measures already implemented
Working capital optimization initiatives
Stress testing of liquidity under various scenarios

Bottom Line: How to Thrive Despite Tariffs

US-Canada tariffs have created a tough business environment, and banks are getting stricter about who they lend to. The solution isn't just finding new financing—it's changing how your business operates. The most effective approaches include using AR insurance to expand beyond US markets, finding new suppliers, shifting production to Canada where it makes sense, and optimizing your customs strategy.

To keep your bank happy in this environment, you need to show them you're actively adapting. Come prepared with documentation of your supply chain changes, market diversification efforts (backed by AR insurance), financial projections for different scenarios, and improvements to your inventory management.

Remember that banks mainly care about getting paid back—show them how you're adapting to the new reality rather than hoping tariffs will disappear. The businesses that succeed will be those who see this challenge as an opportunity to build stronger, more diversified operations that don't depend too heavily on any single market.